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HHS Announces 2020 Annual Adjustments to Civil Monetary Penalties for HIPAA, MSP, and SBC Violations


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· 5 minute read

HHS, Annual Civil Monetary Penalties Inflation Adjustment, 45 CFR Part 102, 85 Fed. Reg. 2869 (Jan. 17, 2020)

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HHS has announced its annual adjustments of civil monetary penalties for statutes within its jurisdiction in accordance with a 2015 law requiring annual adjustments for inflation by January 15 of each year. The latest amounts are based on a cost-of-living increase of 1.01764%. Here are highlights of the adjustments potentially affecting employer-sponsored health plans:

  • HIPAA Administrative Simplification. HIPAA administrative simplification encompasses standards for privacy, security, breach notification, and electronic health care transactions. The HITECH Act substantially increased the penalty amounts for violations of these standards, creating four categories of violations that reflect increasing levels of culpability and establishing minimum and maximum penalty amounts, as well as an annual cap on penalties for multiple violations of an identical provision (see our Checkpoint article). The indexed penalty amounts for each violation of a HIPAA administrative simplification provision are as follows:

    • Tier 1—lack of knowledge: The minimum penalty is $119 (up from $117); the maximum penalty is $59,522 (up from $58,490); and the calendar-year cap is $1,785,651 (up from $1,754, 698).
    • Tier 2—reasonable cause and not willful neglect: The minimum penalty is $1,191 (up from $1,170); the maximum penalty is $59,522 (up from $58,490); and the calendar-year cap is $1,785,651 (up from $1,754,698).
    • Tier 3—willful neglect, corrected within 30 days: The minimum penalty is $11,904 (up from $11,698); the maximum penalty is $59,522 (up from $58,490); and the calendar-year cap is $1,785,651 (up from $1,754,698).
    • Tier 4—willful neglect, not corrected within 30 days: The minimum penalty is $59,522 (up from $58,490); the maximum penalty is $1,785,651(up from $1,754,698); and the calendar-year cap is $1,785,651 (up from $1,754,698). [EBIA Comment: The calendar-year caps for Tiers 1–3 do not reflect the enforcement discretion announced by HHS in April 2019 (see our Checkpoint article), which significantly reduces the penalty caps for those tiers, perhaps because HHS still has not formalized the enforcement discretion.]
  • Medicare Secondary Payer. The Medicare Secondary Payer statute prohibits a group health plan from “taking into account” the Medicare entitlement of a current employee or a current employee’s spouse or family member and imposes penalties for violations. The indexed amounts for violations applicable to employer-sponsored health plans are as follows:

    • Penalty for offering incentives to Medicare-eligible individuals not to enroll in a plan that would otherwise be primary: $9,639 (up from $9,472).
    • Penalty for willful or repeated failure to provide requested information regarding group health plan coverage: $1,569 (up from $1,542).
    • Penalty for responsible reporting entities that fail to provide information identifying situations where the group health plan is primary: $1,232 (up from $1,211).
  • Summary of Benefits and Coverage (SBC). An SBC generally must be provided to participants and beneficiaries before enrollment or re-enrollment in a group health plan. The penalty for a health insurer’s or non-federal governmental health plan’s willful failure to provide an SBC is $1,176 (up from $1,156) for each failure.

These adjustments are effective for penalties assessed on or after January 17, 2020, for violations occurring on or after November 2, 2015.

EBIA Comment: The annual adjustments to penalties are designed to preserve their deterrent effect in the face of inflation. HHS’s “annual” adjustments have come at irregular intervals—the preceding adjustment just happened in November 2019 (see our Checkpoint article). These regulations may reflect an effort to align the adjustments with the annual January 15 deadline going forward. For more information, see EBIA’s HIPAA Portability, Privacy & Security manual at Section XX.E (“Civil Monetary Penalties”). See also EBIA’s Group Health Plan Mandates manual at Section XXIV.K (“Medicare Secondary Payer (MSP) Requirements: Enforcement”), EBIA’s Health Care Reform manual at Section XVI.I (“Consequences of Failing to Provide the SBC”), and EBIA’s Self-Insured Health Plans manual at Section XXVIII.C (“Summary of Benefits and Coverage (SBC)”).

Contributing Editors: EBIA Staff.

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